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Alaskan Cook Inlet Oil Rush, Who Will Lead The Pack?

|Includes: Apache Corporation (APA), BP


The United States uses 18 to 19 million barrels of oil every day.  We currently we import 2/3 of that oil from countries around the World.  Our domestic supply of oil has been in decline for the last 25 years.  There are very few bright spots on the domestic front and several dark spots internationally.  Of countries we import oil from, several are unstable, others are in unstable regions, while still others have competitive reasons to sell their oil to other consuming countries.

The United States oil production is organized around two regions, the Gulf of Mexico, the Oil Patch, and the States of Alaska and California.  The largest source of domestically produced crude oil comes from federally controlled waters inlcuding the Gulf of Mexico and some production from offshore Alaska.  If you have been watching the news lately you are well aware of the problem caused by the tragic explosion that sunk the Deepwater Horizon and the resulting environmental disaster.  This incident has been followed with a moratorium on drilling deep water gulf of Mexico, defined as 500 feet or deeper.  The moratorium comes at a time when the Middle East, another major supplier is facing trouble.  Iran is threatening to become a nuclear power, and wipe Israel off the face of the planet.  Israel is having trouble enforcing its blockade of Gaza forcing confrontations with Turkey.  Turkey is one of our allies and friendly to the Palestinians.  Egypt is facing troubles of its own, making the entire region highly volatile.  Nigeria, another major producer continues to have difficulties in the Niger Delta.  Venezuela has experienced increasing declines of production and is openly hustle to the United States.  Of course here in the United States we are well aware of the drug wars in Mexico and the steep declines in oil production in the country.

According to Sarah Palin, this means come to Alaska.  "Extreme Greenies," she wrote. "See now why we push 'drill, baby, drill' of known reserves and promising finds in safe onshore places like ANWR? Now do you get it?"

Gov. Sean Parnell last week signed a pair of bills crafted by Anchorage and Kenai legislators to try to boost Cook Inlet gas exploration and create natural gas storage options for reducing the winter supply crunch. The state tax concessions in the bills are huge: for their drilling, companies can shave tens of millions of dollars off their income and production tax liabilities.

For the United States the deepwater of the Gulf of Mexico has been a fantastic story that may have come to an abrupt halt.  With 89% of the oil production in the Gulf Of Mexico coming from the deepwater and 30% of the United States domestic oil supply coming from the Gulf the recent bane on drilling and production creates quite a problem for the United States.  While it may be easy for the President to announce that he has halted production, the unintended consequences are huge.  It is estimated that over 55,000 petroleum-related workers are employed in the Gulf of Mexico offshore industry. The Gulf of Mexico contains estimated 36-41.5 billion barrels of undiscovered, economically recoverable oil and 161-207 trillion cubic feet of undiscovered, economically recoverable natural gas resources.  The federally managed OCS provides the bulk—about 89%—of all U.S. offshore production. Five coastal states—Alaska, Alabama, California, Louisiana and Texas—make up the remaining 11%.  Effectively the President has exposed us to an incredible liability.

To make matters worse, he has also halted production in the federally controlled waters off the coast of Alaska and any new drilling off the east coast of the United States.

So where are the bright spots alluded to earlier in this article.  One State and particularly one part of that State stands to benefit in this scenario.  Alaska has some real promise for the United States.  The ANWAR area has prospects that are just north, like the Stinson project outlined on www.Donkiloilalska.com and the Cook Inlet of Alaska which might be our last and greatest hope to add some stability and security for the United States.  Alaska and these prospects reside in State controlled waters and has been producing oil and gas for the last 50 years.  The infrastructure is in place and many of the geologic structures were mapped over 25 years ago.  The majors, like BP, halted exploration in the area in favor of the North Slope and other international locations some 20 years ago.  Today, this gem resides outside the purview of Deepwater, and the President of the United States and safely in the hands of the citizens of Alaska.

So who will be the first to re-enter this region and help soften the blows dealt by the BP explosion and the unrest internationally.  A small cadre of independents have decided to brave the trek north and begin rebuilding the once prolific basin.  They include companies like Link Energy, Cook Inlet Energy, Escopeta Oil and Gas, and Buccaneer Energy.  .

With all of this activity which of the independents will follow, or perhaps beat Apache to the punch and gain a foothold before this “oil rush” begins.  Only time will tell.  Buccaneer is already in position and Link has already made their move.  They can move more quickly and the leaders of these fine companies understand the risk that non-action represents both economically to them and to the country.

The largest number of independents in the United States are headquartered in Houston Texas.  Escopeta and Buccaneer Energy are both from Houston.  I would like to make a call to arms, all of the independents that President Obama just shut down in the Gulf need to make their way North.  Alaska is ready to help, offering up to $.65 cents back on any money spent in the Cook Inlet on Exploration and those that have left the majors are ready to bring local intelligence to bear so that the risk is minimized. 

With drilling companies being threatened in the Gulf of Mexico, Governor Parnell has offered 20-60 million dollars to bring a rig to the Inlet.  With employees being let go in the Gulf of Mexico we need to get a new oil rush going in Alaska and the statement, “Head North Young Man” will mean something again.

The North Slope and the Cook Inlet has huge reserves that have been discovered, lower operating costs because the States incentive programs, and willing participants to make the job of developing the region much easier.  With the rest of the world turning their backs on the United States, and the United States Federal Government taking our future for granted,  it is time to take matters into our own hands and supply the necessary energy to keep our country’s economy safe.

 

State Sen. Tom Wagoner, R-Kenai, predicted a "stampede" of companies will descend on the Inlet to drill.

Some people refer to this bill at the "Stampede Bill" but it really shows that Alaska is committed to get somethings done.